The issuer of a note or cashier's check or other draft drawn on the drawer is obliged to pay the instrument (i) according to its terms at the time it was issued or, if not issued, at the time it first came into possession of a holder, or (ii) if the issuer signed an incomplete instrument, according to its terms when completed, to the extent stated in sections 4-3-115 and 4-3-407. The obligation is owed to a person entitled to enforce the instrument or to an indorser who paid the instrument under section 4-3-415.
Source: L. 94: Entire article R&RE, p. 867, § 1, effective January 1, 1995.
ANNOTATION
Annotator's note. The following annotations include cases decided under former provisions similar to this section.
Makers engage under this section to pay a note according to its tenor upon its falling due. Reese v. Lietzan, 160 Colo. 253, 419 P.2d 959 (1966).
The burden of avoidance is on maker. Where the maker makes no claim of mistake in the making of his written promise and the note on its face bears a consideration, the burden of avoidance of payment rests solely upon the maker. McCaffrey v. Mitchell, 98 Colo. 467, 56 P.2d 926, 57 P.2d 900 (1936).
Presumption does not apply where fiduciary relationship. The general presumption of liability of maker of promissory notes is over come by the specific presumption arising out of where there is a fiduciary relationship, in which case the claimant must overcome, by evidence, the presumption of undue influence with which the transaction is tainted because of the existence of the fiduciary relationship. Arnold v. Abernethy, 134 Colo. 573, 307 P.2d 1106 (1957).
The thoughts and purposes of the maker, not disclosed at the execution of the contract, may not be given to the jury in an attempt to show that the instrument means something other than what is shown on its face. McCaffrey v. Mitchell, 98 Colo. 467, 56 P.2d 926, 57 P.2d 900 (1936).
Maker cannot be heard to say that payee committed an illegal act in taking instrument, or had no authority to dispose of it, in the usual course of business, because, by its execution and delivery, he is precluded from raising any of these questions as against purchasers who obtained it for value before maturity without notice of the facts upon which he relies to defeat it. McMann v. Walker, 31 Colo. 261, 72 P. 1055 (1903).
Such as note given to foreign corporation which fails to comply with statutory prerequisites for doing business. See McMann v. Walker, 31 Colo. 261, 72 P. 1055 (1903).
The equities that may exist between payees governing the division of funds paid pursuant to a commercial promissory note are none of the makers' concern, as they must simply pay the note according to its tenor to the holder at maturity. Reese v. Lietzan, 160 Colo. 253, 419 P.2d 959 (1966).
Who is deemed the prima facie owner. Where an action is brought on a promissory note payable to the maker and indorsed in blank by him with a guarantee of payment, one having possession of the note is prima facie owner thereof and can recover against the maker as such. Byers v. Bellan-Price Co., 10 Colo. App. 74, 50 P. 368 (1897).
The maker of a promissory note may plead that another is the real owner thereof, that the action is prosecuted for his benefit, and set upon an indebtedness due and owing by such party in interest to him. Bank of Bromfield v. McKinlay, 53 Colo. 279, 125 P. 493 (1912).
Demand is not a condition precedent to an action on a note against the maker. Erdman v. Hardesty, 14 Colo. App. 395, 60 P. 360 (1900).
Including of bank holding municipal bonds. Where a municipality issues bonds, payable at the option of the holder at a bank, the failure of a holder to present the bonds for payment at such bank does not relieve the municipality as maker, although the bonds and payment fund have been forwarded to the bank by the municipality. Employers Mut. Ins. Co. v. Bd. of County Comm'rs, 102 Colo. 177, 78 P.2d 380 (1938).
Where money has been diverted from fund, bondholders may sue on the bonds as for a money demand and not be relegated to a mandamus action. Employers Mut. Ins. Co. v. Bd. of County Comm'rs, 102 Colo. 177, 78 P.2d 380 (1938).
Where a promissory note is executed and unconditionally delivered to a real estate agency as payee as part of a purchase price agreement, the payee may maintain an action upon the note without regard to any interest therein of the owner of the properly sold. Hubby v. Willis Agency, Inc., 131 Colo. 565, 283 P.2d 1080 (1955). See Retallic v. Dixon, 75 Colo. 123, 224 P. 1054 (1924).
Rule prior to N.I.L. made surety a joint maker. Edmonston v. Ascough, 43 Colo. 55, 95 P. 313 (1908).